Europe's A Worry For Cisco But Markets Have Priced In A Worst-Case Scenario

Tue, 05/22/2012 - 15:38 EDT - Forbes.com - Top Stories

The deepening of the European debt crisis could still have a telling effect on the company's business, but Cisco's increased focus on its core businesses while driving operational efficiency should help it generate positive operational cash flows even then.

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By Trefis:
Cisco (CSCO) is set to announce its Q2 FY 2013 earnings on Feb. 13. Last quarter, the company saw a healthy growth in revenues as U.S. spending returned to strength amid sustained demand for networking gear in emerging markets. However, macroeconomic concerns surrounding the euro debt crisis weighed on network spending in Europe, which accounts for close to 20% of Cisco's revenues.

Cisco Systems Inc. is gearing up to report its second quarter earnings for the fiscal year 2015 (2QFY15) after the markets close today. Investors and analysts will be closely observing the results and the subsequent movement in the stock. The company is expected to benefit in the quarterly earnings on the back of weak year-old earning figures and the increase in sales of new products in the past few months. In the last quarter (1QFY15) Cisco’s revenue disappointed investors.

Trefis submits:
Cisco (NASDAQ:CSCO) recently released its Q3 fiscal 2011 earnings and we have adjusted our estimates and price estimate for the company. Investors continue to penalize Cisco for its lost focus on the core businesses and weak outlook.

The earnings hit parade keeps on rolling, but not in the directions bulls wanted or expected. And with stocks priced well beyond perfection, today's reaction should hardly be a surprise. Yet, treasury yields soared once again in spite of poor earnings, and in spite of a flat industrial production report.
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By Vatalyst:
Cisco Systems Inc (CSCO) has spent much of this calendar year retrenching, regrouping, and re-focusing on its core businesses as it fights to battle slowing markets and some wrong turns made by management in the past. Its clearer focus has led to increasing revenue over the past 12 months, though the costs associated with this retrenching have taken their toll on the bottom line.

ByBrendan O'Boyle:How much of the potential upside from a solution to the fiscal cliff has already been priced into the market? Answering this question necessarily requires a number of assumptions, however, one strategy is to envision the best and worst case scenarios and estimate the expected upside or downside in each case. Once this is finished an approximation of the likelihood of the two scenarios will enable an investor to calculate the 'pot odds' that are presently priced into the market.

The Dow falls 102 points as worry grows that Europe's sovereign debt crisis could be worsened by deepening economic strangulation and public outrage at austerity measures.A painful sell-off in European stock markets spilled into the U.S., sparking a broad-based decline that illustrated investor unease with the economic and political upheaval in Europe.